GO
Loading...

US airlines ‘afraid of competition’: Norwegian CEO

The boss of budget long-haul airline Norwegian has hit back at critics, claiming they are "afraid of competition", amid a raging debate over how the Scandinavian company employs workers.

Norwegian launched a twice-weekly transatlantic flight from London to Los Angeles on Wednesday, and will also fly to Fort Lauderdale and New York, beginning this week. These event marks the first venture into budget long-haul flights since Freddie Laker's Skytrain failed in 1982.

But Norwegian has been caught up in controversy over its employment policy and been accused by the several pilot unions across the world of hiring Thai crew on Singaporean contracts. The company has a "resource group" in Singapore from where it can hire staff from Bangkok. The unions claim that Norwegian is able to hire lower cost workers who also have poorer training than U.S. and European standards, putting passengers' safety at risk.

The budget carrier has repeatedly refuted the claims and explained its policies in a post on its website last month.

Read MoreCan Asia's low-cost carriers go the distance?

"Ireland was not chosen because the country has specific rules and regulations that allow the use of American or Asian crew, like some politicians and unions have claimed," the company said.

"The airline fully complies with European safety standards (EASA) and its crews are trained according to EU standards and the company's own additional training programs."

Norwegian, which also operates similar long-haul routes between Thailand, Scandinavia and the U.S., has a fully-owned subsidiary in Ireland. Critics have likened its operations to the shipping tactic know as a "flag of convenience" whereby a merchant ship registers in a country different to that of its owner to take advantages of lenient regulations. The unions claim that Norwegian is using lax labor laws in Ireland to hire cheaper workers from Asia.

Tomm W. Christiansen | Bloomberg | Getty Images

However, Bjørn Kjos, CEO of Norwegian, says complaints by unions about the airline's hiring policies are not grounded in fact and American carriers are "afraid of competition" from his carrier.

"They are afraid of competition, that's a matter of fact because it is so costly to fly over the Atlantic," Kjos told CNBC in a TV interview.

The Airline Pilot Association (ALPA) is urging the U.S. government to block Norwegian's Irish subsidiary a permanent foreign carrier permit, claiming that its flag of convenience approach circumvents the labor rights set out in an airspace treaty between the European Union and the U.S. known as the Open Skies Agreement.

Read More'Full-fledged war' awaits India's airline sector

Norwegian has continuously refuted the claim. Last month, the company said that it opened an Irish subsidiary in order to get access to the EU of which Norway is not a member.

"It is important to stress that Ireland was not chosen because the country has specific rules and regulations that allow the use of American or Asian crew, like some politicians and unions have claimed," Norwegian said in a statement on June 4.

Dreamliner cost cut

Norwegian currently operates a fleet of 95 aircraft and Kjos said the key to the low-cost flights is the fuel savings achieved by using the Boeing 787 Dreamliner.

"It's very cheap to operate the Dreamliner than it is on other types of aircraft…we have a slim and trim airline, we have to learn with all the flights we have on the short haul within Europe, so we have learned and moved that experience over to the long haul," he said.

While Norwegian said it launched flights from Europe to New York for $99 last year, ticket prices are significantly higher now because of the summer season.

Read MoreStarry-eyed budget carriers in Southeast Asia stare at overcapacity

Norwegian saw a 12 percent rise in the number of passengers carried in May compared to a year ago but its share price has fallen 22 percent in the last 12 months.

Looking east

The company currently only flies to Thailand in Asia, but Kjos signaled Norwegian's intention to head to the Far East.

With an increasing number of "curious" travellers coming from India and China, travellers will be coming to Europe in their "masses", according to Kjos.

"There will be lots of opportunities, and lots of jobs will be created out of that," Kjos told CNBC.

- By CNBC's Arjun Kharpal

Contact Transportation

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More